Post-Covid-19, here’s what the student housing industry will look like
While the global health crisis has left a huge impact these past few months, the economy is slowly but surely picking up pace trying to resume operations. Most businesses have adapted to the post-pandemic era by adjusting to the changing needs of their customers and opting for a new sustainable model of operation. All of this while trying to figure out ways to navigate the financial and functional challenges that come with the territory.
Impact on universities
When talking about the higher education sector, the impact can be felt across all verticals — the universities and colleges, the students, and the student housing operators. A lot of universities are showing considerable flexibility in their admission process and offering concessions in terms of fee-waivers in hopes of increasing the enrolment for the upcoming academic year.
Now the great news for students is that most universities are gearing up to reopen for the upcoming intake. This time with a focus on a more blended learning method, paving the way to a new educational paradigm.
Student Housing Outlook
In the immediate term, travel restrictions have disrupted the movement of international students and demand across the board has diminished. But things are bound to pick up pace since the universities in the UK and Ireland are gearing up to open up for the September and showing flexibility by deferring most of their admissions. Even in India, the universities are hard at work and have resumed their admission process as they remain hopeful that the situation will return to normal by August.
Although these steps may hit the private sector student accommodation market for a while because it primarily depends on students pursuing higher education abroad, things will pick up pace once the universities return to normalcy.
A report by Cushman & Wakefield suggests that the cost to the private accommodation providers offering contract releases is almost equal in size to universities. This amount accounts for a proportion of revenue for the summer term and results in short term pressure on the operators and investor cashflows.
Although the security deposit paid by the students helped accommodation providers avoid revenue shortfall, they are now working to provide forbearance strategies by adjusting their occupancy plans for the upcoming intake.
Most active operators are seeking B2B opportunities through an alternate source and a revenue share model with property owners to mitigate future risk. As investment in PBSA markets comes to a slow halt, it is likely that the underlying strength of the sector will bounce back to mirror the market sentiment once the dust has settled. Because it is during the recession that people would rather turn to higher education than enter an unstable job market.
At the same time, there may be a substantial adjustment to the proportion of international students taking up places at universities across the globe which will add to the pressure on accommodation providers.
When the universities reopen and the social distancing norms have to be followed, there might be a limitation on the number of students that can be accommodated on campus and this will drive higher demand for off-campus housing.
During the initial stages of the pandemic, student housing operators were swift in their actions. Now what remains to be seen is how the higher education segment – universities and accommodation provider – implement these measures once the term resumes. It may be a difficult task at the beginning but it is definitely not impossible since the appeal of off-campus accommodation lies in providing a balanced university experience and various networking opportunities through communal spaces.
Given the current situation, there are also a few changes that might replace the existing model of student housing as the health and safety of the residents remains the number one priority of the operators.
The first would be the shift from communal living spaces to more private rooms which will not only help manage the spread of the coronavirus but also provide privacy to the students. The second would be frequently and closely monitoring the cleanliness of the communal spaces which is where residents spend most of their spare time. The third would be the provision of onsite meals since most of the students will be cautious, at least during the first few months of the universities opening.
Lastly, student housing will be quick to embrace technology to minimise human interaction, with voice-activated sensors, facial recognition software, and other touchless technology. What’s more, even from a security point of view, residences that use mobile applications at entry gates would be a great way to reduce touch points.
And it is not only the operators that will be expected to implement the changes while adjusting to the new normal, even the residents would be expected to do their part by remaining mindful of social distancing.